L. REAGAN, )
vs. ) CASE NO. 76-1744
Respondent. )
Pursuant to notice, the above cause came on For hearing beFore the Division of Administrative Hearings' duly designated Hearing Officer, James E. Bradwell, on December 6, 1976, in Coral Gables, Florida.
The Florida Real Estate Commission (hereinafter sometimes referred to as the Commission) by its nominal plaintiff, C.L. Reagan, filed an administrative complaint against Frank Viruet seeking to revoke registration of or otherwise discipline him For acts and practices he engaged in during a period of approximately January 2, 1976 through January 16, 1976 1/ as alleged in three counts.
This cause is a companion case to: (a) C.L. Reagan v. Bernard Bauman - FREC Progress Docket #2857 and (b) C.L. Reagan v. Jeffrey H. Bauman - FREC Progress Docket #2858. The three cases were considered and heard simultaneously since they involve common and material facts. 2/
Under Count One, it is alleged that the Defendant, Frank Viruet, operated as a real estate broker of and For a corporation which was not registered by and with the Commission as a corporate real estate broker, in violation of the provisions and intent of Subsection 475.42(1)(k) , Florida Statutes, thereby violating Subsection 475.25(1)(d), Florida Statutes.
Under Count Two, it is alleged that the Defendant, Frank Viruet, solicited real estate sales by means of dishonest dealing, trick, scheme or device, in violation of the provisions and intent of Subsection 475.25(1)(a), Florida Statutes.
Under Count Three, it is alleged that the Defendant, Frank Viruet, engaged in a course of conduct or practices, as set out in the above Counts One and Two, which show that he is so dishonest and untruthful that money, properties, transactions and rights of investors or those with whom he may sustain a
confidential relation may not safely be entrusted to him, in violation of the provisions and intent of Subsection 475.25(3), Florida Statutes.
Based upon my observation of the witnesses and their demeanor while testifying, I make the following:
Evidence reveals that during late December, 1975, Land Re-Sale Service, Inc., a Florida Corporation, filed application with the Florida Real Estate Commission seeking registration as a corporate real estate broker. Said application revealed that Defendant, Frank Viruet, was to become the Active Firm Member Broker, and Vice president of the Company; that Carol Bauman was to become Secretary-Treasurer and Director of the company; and that Lee Klien was to become president and Director of the company. The application also revealed that Carol Bauman is the wife of the Defendant Bernard Bauman (Progress Docket #2357); that Lee Klien is the sister of Carol Bauman; and that Defendant Jeffrey Bauman (Progress Docket #2858) is the son of Bernard Bauman.
Subsequent to filing the above corporate application For registration, the name was changed to Noble Realty Corporation and shortly thereafter to Deed Realty, Inc. and that at each such change, new application For corporate registration was filed with the Commission. Further, the stated offices and Active Firm Member Broker remained the same. Thus, For all legal purposes, the above corporate entities are one and the same.
As to Count One of the complaint, according to the certificate of the Commission's Chairman, dated December 3, 1976, (which was offered and received into evidence without objections), during the period November 1, 1975 through the date of said certificate, no registration was issued to or held by either of the three corporations above referred to. This was confirmed by testimony of Bernard Bauman who was to have become a salesman associated with the above entities and by Frank Viruet the broker, who was to have become the Active Firm Member Broker For the above entities.
Approximately December 2, 1975, evidence reveals that Land Re-Sale Service, Inc., entered a written lease For office premises known as Room 212, Nankin Building, which is located at 16499 N.E. 19th Avenue, North Miami Beach, For the period January 1 through December 31, 1976. (A copy of the lease was entered into evidence by stipulation). The unrebutted testimony by Plaintiff Reagan was that he observed during his investigation of this cause, a building directory on the ground floor entrance to the Nankin Building displaying the name Noble Realty, Inc., Room 212 (2nd Floor). A similar display on the building directory appeared on the second floor.
Plaintiff's witness, Peter King, a representative of and For Southern Bell Telephone Company, testified that on December 27, 1975, three phones were installed in said room 212 of the Nankin Building in the name of Land Re-Sale Service, Inc., and that from January 1 through January 16, 1976, approximately
575 phone calls were made from such phones during evening hours to out-of-state numbers.
Jeffrey Bauman and Bernard Bauman admitted to having made phone calls to out-of-state numbers For purposes of soliciting real estate sales listings, but did not recall nor introduce records as to how many calls were in fact made. Jeffrey Bauman testified that Frank Viruet had also made phone calls from the stated phones but did not state whether they were solicitations. On this point,
Frank Viruet denied making solicitation calls although he admitted using the phone For other purposes.
Bernard Bauman testified that approximately four listings were obtained with an advance fee of $375.00 For each listing received. He further testified that upon being advised, by the investigator with the Commission, that the operation was in violation of the licensing law by reason that no registration had been issued to the applicant company, and that all who were engaged in real estate activities For said company were in violation of the licensing law, the premises were closed and all real estate activities ceased. This was confirmed by nominal Plaintiff Reagan. Frank Viruet denied having knowledge of real estate activities being conducted by the Baumans. He further denied knowledge that office space in Room 212 of the Nankin Building was occupied by Land Re- Sale Service, Inc. and used by the Bauman's. He admitted to signing the application For registration which was submitted to the Commission as the corporate Active Firm Member Broker to be.
As to Count Two, evidence established as stated above, that defendants Jeffrey and Bernard Bauman had solicited real estate sales listings with representations to property owners that the listings would in fact be published and disseminated to brokers nationwide. However, the Baumans, admitted by their own testimony that their listings were never published or otherwise disseminated to brokers either intrastate or nationwide. Bernard Bauman testified that no money was ever returned to senders.
There was no evidence received to show that Defendant Frank Viruet knew that no bona fide efFort would be made to sell the property so listed with Noble Realty Corporation; nor that Viruet was aware that solicitations were being made. As to Count Three, Plaintiff alleges that the acts and doings set out in Counts One and Two establish a course of conduct by defendants upon which revocation of their registration should issue.
CONCLUSIONS OF LAW
As stated in Count One Defendant is charged with violating Subsection 465.42(1)(k), Florida Statutes and thereby violating Subsection 475.25(1)(d), Florida Statutes. Subsection 475.42(1)(k), Florida Statutes, states:
"No person shall operate as a real estate broker ... or as a corporation or as an officer ... thereof, unless said ... corporation is the holder of a valid current registration certificate,"
as defined in Subsection 475.42(3)(a)(b)(c), Florida Statutes.
Section 475.25 sets out grounds For revocation or suspension and under Subsection (1)(d), it provides For a suspension period not exceeding 2 years if registrant: "violated any of the provisions of said chapter. ...
The evidence clearly established that Bernard Bauman and Jeffrey Bauman were soliciting sales listings For and in the name of Noble Realty Corporation and thereFore operated as real estate brokers or salesmen, as defined in Subsection 475.42(3)(a), Florida Statutes. In view thereof, and since the corporation was not a holder of registration as a broker, it thereFore follows that Frank Viruet, Jeffrey Bauman and Bernard Bauman were not holders of current valid registration certificates.
In an action under the Real Estate Licensing Law For suspension of registration, the brokers's knowledge, approval or ratification must be proven. Mere denial of knowledge by the broker is not generally a good defense since the broker is under a duty to carefully supervise the salesmen. Failure on his part to carefully pay attention to his business and exercise reasonable control of his salesmen makes him guilty of culpable negligence thus applying the knowledge ultimately needed For an action against a broker.
It is concluded that since Frank Viruet was, signing the corporate applications and was assuming the duties and responsibilities as Active Broker of and For the company salesmen, he must be held guilty of culpable negligence For failing to have knowledge and control over the salesmens' activities carried out in the name of and For the company even though registration had not yet been issued to the corporation.
In Count Two, Frank Viruet is charged with dishonest dealing, trick, scheme or device in a real estate transaction, and of committing overt acts of intent, design or scheme, in violation of Subsection 475.25(1)(a), Florida Statutes. While it is alleged that Frank Viruet knew that no bona fide efFort would be made to sell the properties listed with Noble Realty Corporation, there is no evidence to support this allegation. Accordingly, Frank Viruet is not guilty as to the allegations contained in Count Two.
In Count Three, Frank Viruet is charged with a course of conduct, under the provision of Subsection 475.25(3), Florida Statutes, based on repeated acts set out in Counts One and Two. However, there was no evidence to support this allegation.
It is thereFore RECOMMENDED that the registration of Frank Viruet be suspended For a period of one (1) month. In all other respects, it is recommended that the complaint allegations in Counts Two and Three be dismissed.
